LCXX(SZ:000977) Haitong Securities·2024-07-25 01:31Investment Rating - The investment rating for the company is "Outperform the Market" [2][9] Core Insights - The company experienced a significant decline in cash flow in 2023 due to increased inventory, but is expected to see substantial growth in H1 2024, with projected net profit growth of 75.56% to 107.48% year-on-year [6][9] - The company is actively preparing for opportunities in the AI sector by stockpiling inventory and adapting to domestic chip suppliers, amidst challenges from supply chain disruptions [5][9] - The AI server market in China is projected to grow significantly, with the company positioned to benefit from this trend through its innovative product offerings and strategic partnerships [7][9] Financial Performance Summary - In 2023, the company reported revenue of 65.87 billion yuan, a year-on-year decrease of 5.41%, and a net profit of 1.783 billion yuan, down 14.54% [6][11] - The company anticipates revenue growth of over 60% in H1 2024, with Q2 revenue expected to exceed 22 billion yuan [6][9] - The projected financials for 2024 include revenue of 75.71 billion yuan and net profit of 2.137 billion yuan, reflecting a recovery and growth trajectory [12][9] Business Segmentation - The company's revenue from servers and components in 2023 was approximately 65.24 billion yuan, a decrease of 5.53% year-on-year, while IT terminals and components saw a 29.77% increase [11][9] - The company is focusing on enhancing its product line and customer satisfaction to capture market opportunities in the AI sector [8][9] Market Position and Competitive Landscape - The company faces competition from well-known domestic enterprises and is working to reduce labor costs while increasing R&D and sales efforts [7][9] - The company has established partnerships with several domestic AI chip firms to mitigate supply chain risks and enhance its market position [5][9] Future Outlook - The company is expected to benefit from the ongoing AI boom, with revenue projections for 2024, 2025, and 2026 at 75.71 billion yuan, 84.78 billion yuan, and 93.25 billion yuan respectively [12][9] - The estimated earnings per share (EPS) for 2024, 2025, and 2026 are projected to be 1.45 yuan, 1.72 yuan, and 2.03 yuan respectively [12][9]